Brandon

Saturday, December 13, 2008

One More Time: UNIONS to blame for Auto Maker Troubles!

After my post regarding the successful GOP filibuster of the United Auto Workers bailout bill I received a comment suggesting that Republicans were engaged in "union busting" and others trying to distract from the real issue here by launching onto convenient tangents. All good Democrat talking points, but as usual, all WRONG!

Larry Kudlow, the host of CNBC's Kudlow & Company, goes into detail on the issue and his article is worth reading in it's entirety. Excerpts are below:

Who's Losing the U.S. Car Business?
By Lawrence Kudlow
Real Clear Politics
December 13, 2008

After Chairman Mao's revolution about 60 years ago, people in the U.S. played the blame game by asking, "Who lost China?" Well, following the breakdown of an arduous seven-hour Senate negotiating session on Thursday night, many are asking, "Who lost the U.S. car business?" Right after the UAW vetoed a compromise, bankruptcy-lite, Detroit-little-three rescue plan put together by Tennessee Republican Bob Corker, UAW president Ron Gettelfinger played the blame game by blasting Corker and the Republican party for "singling out" union workers to shoulder the burden of reviving the U.S. car business.

In truth, the UAW is to blame.

If Sen. Corker's plan had prevailed, with UAW support, many believe it would have had 90 votes in the Senate. GM could have gone forward with a clean-as-a-whistle balance sheet under a three-part restructuring plan that included a $60 billion bond-refinancing cram-down, a renegotiation of the $30 billion VEBA health-care trust, and a pay-restructuring plan that would put Detroit compensation levels in line with those of foreign transplants Honda, Toyota, Nissan, and BMW.

Average compensation for the Detroit little three is $72.31. Toyota's average wage is $47.60, Honda's is $42.05, and Nissan's is $41.97, for an average of $44.20. So Corker's idea was to bring that $72 a lot closer to that $44. (Corker notably knocked out Korean carmaker Kia, which has super-low wages.)
...

All Corker asked was a 2009 date for union pay restructuring. Sen. Corker never specified his date. He asked the UAW to name its date for a new pay package. But it had to be in 2009. In return, union members would get a lot of stock in this deal -- up to $10.5 billion of new equity as GM's heavy debt burden would be converted into common shares.

But the UAW refused to make concessions. Instead, it insisted it would only renegotiate its current contract when it ends in 2011. That was the sticking point that killed the deal.

You have to ask this question: If the Detroit carmakers are in dire straits, going broke in two weeks, right now in late 2008, how can the UAW wait until 2011 to make its concessions? The financial problem is today, not two years from today. The threat of liquidation, with perhaps a few million autoworker, supplier, and car-dealer jobs lost, is today's threat, not a 2011 threat. So what's the UAW waiting for?

That's easy. Gettelfinger is waiting for President Obama and a Senate with 58 Democrats.
...
So while Sen. Corker was negotiating in good faith (even with the support of Democratic big-wig Chris Dodd), Gettelfinger doomed the deal, knowing full well that the Democratic Senate conference would never walk away from the UAW.
Why should workers whose companies and their unions manage themselves in a way to produce a profit be forced to pay for a bailout for a union and companies that simply refuse negotiate in good faith?

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